Pupule promotions, demotions

With a tide of earnings reports in, it's time for some shuffling in my stock pick lists. Movin' on up:

Nintendo NTDOY.PK whacked it out of the park with its gigantic revenues and profits.

If it's one thing about the Japanese market, the fluff and wild speculation are just not, well, fluffy and wild. Think about it. While we have intrigue and bubble thoughts hovering over China — not to mention the way the government's ownership in major stocks — it's not so in Japan. Savings rates among citizens are astronomically high, as always, and bubble-icious stocks are not as prolific as they are in China or the U.S.

That's not why I am so devoted to Nintendo, however. It's about the numbers, which don't lie. That's why I'm backing up my bullish stance (and holding) by moving NTDOY.PK from B+ to A-.

Finally.

Garmin This is a Co that was on my B list when it should've been at B+, which is where I'm moving it today. Not understanding what the Co does is a large reason why I paid so little attention to it. Strictly on the numbers, though, I liked it at the B level. GRMN's earnings report is due out on Wednesday.

Demoted:

Spartan Motors As a Co, not much has changed for SPAR. Landing contracts (or not) is a way of life, an irrefutable fact of life that alters its stock. But the flip side of it is that the fundamentals of Spartan won't make investors a profit unless revenues are realized, and without the latter, the stock has tumbled mightily. As much as I rely on a Co's fundamentals, stocks are about popularity to an unfortunate, but real extent.

Is yesterday's $1 million stock buyback going to turn the tide? With the earnings miss (by 6 cents per original estimate), that'll be tough. The Co is quite the same. Traders who ran it up and knocked it down ... they're the real Jekyll and Hyde here. The real longs will scoop up cheap shares here at $12, particularly with 40% annual growth coming, according to the Co.

Hoku Scientific Demoted from B- to C+. Great prospects, dwindling revenues (per last week's earnings report), huge promises. HOKU is not your average small cap. It's the equivalent of taking a promising young baseball player out of the minors after a short stint and starting him on a major-league team. Hard-working player, diligent on and off the field, but at least a year or two from hitting his stride.

Opposing fans ride him incessantly for his hefty paycheck. Home fans dote on him and believe he will develop into an All-Star in due time. HOKU traded up today, but at $9 is well off its high in the $14 range. This is likely a trader's dream for the coming 18 months.

Volcom An earnings miss has pulverized the stock, which traded today at $38, a 14% haircut. I own a Volcom surfer wallet and like it. However, unless some new products enter the market, VLCM is going to trade sideways for some time. Retail is a rough market, more so with an outdoor-oriented Co that misses in what should have been its best season of the year. I demoted VLCM from B to C+.

Joy Global Earnings aren't due for another month, but a guidance cut from JOYG sent the shares down 14% on Wednesday.

Demoted down to C+ by Pupule.

Dendreon The silence from top brass is deafening. Insider sales, including those by CEO Mitchell Gold, before the stock took a major plunge off a cliff on May 9, still haven't been explained sufficiently by the Co. Worse yet, the lack of transparency has the SEC mired in an "informal inquiry" of DNDN and its clinical trials.

Provenge is Provenge, a potentially life-extending immunotherapy treatment for prostate cancer patients. However, DNDN has shown no signs of life when it comes to navigating the treacherous waters of the FDA, hedge funds and big pharma. Provenge has been shelved for much too long, and no reason the Co has given can excuse the delay for patients.

Demoted from C to D+. Sadly, until management is shaken up or overthrown, Provenge will remain locked up.

Pupule Paul is long NTDOY.PK, HOKU and DNDN.

Northwest Bio beats Dendreon to the punch

For those of you who are long Dendreon, today was either

a. disheartening, or

b. encouraging

I write this because a little-known Co called Northwest Biotherapeutics became the first to gain approval for a cancer vaccine today. Northwest Biotheraputics (NWBO.OB) announced early this morning that its Phase 1 (yes, that is not a typo) treatment for brain cancer has been approved for use in Q3 in Switzerland.

How is it that a Phase I treatment is already going to market in Europe, while Dendreon's Phase 3 Provenge sits idly with prostate-cancer patients waiting month after month, year after year?

Can it be that Northwest Biotheraputics simply has more finesse and maneuverability? Can it possibly be that Dendreon couldn't find a partner if it were the only boy at an all-girls school dance?

In other words, what the frick is going on here?


Northwest Biotherapeutics had a market cap of $29 million before today's session opened. (The Co is so small, Google Finance doesn't have a summary or quote price, though Yahoo has one.) After trading around $2 in recent days, the PPS spiked up at the open before bottoming around $2.50.

From that point on, NWBO.OB rocketed and finished at $7.33, a gain of 249%. Pink-sheet stocks don't trade in after hours, but there is almost absolute certainty that the stock will continue to climb.

European investors will get word of this news when the sun rises there. Media will also pick up the story. They'll learn that Northwest Bio not only has a treatment ready for market this quarter, but also has a treatment in the pipeline for other cancers. The tiny Co from Bothell, Wash. could trounce the bigger boys in Seattle. With all its eggs in one basket — prostate-cancer treatment Provenge — Dendreon could soon be left in the dust.

Full enrollment for Provenge Phase 3 trial 9902B may not be completed until next year, and the FDA clearly has its scopes set on shooting down Dendreon even if interim results are positive. Sure, the FDA is corrupt, but the game still plays on. The clock stops for no one.

Still, NWBO.OB is a risky stock to delve into. With a float of only 4.17 million shares, it's possible the continued rise in the PPS would make Dendreon's zany ride in March and April feel like slow motion. As quickly as the price goes up, however, it can come down. There's definitely risk in trading a stock like NWBO, but the good news is real.

For the Dendreons of the world, stockholders can only ponder and wonder, what the hell? What is it that Northwest Bio CEO Alton Boynton has that Dendreon's top brass does not? Before I leave you with a forecast of more doom and gloom, however, let's sit on the sunny side of the street. Maybe this will encourage CEO Mitchell Gold to pursue Europe with more vigor. If he has, as rumored, already turned down opportunities there in recent weeks, Northwest Bio's Great Leap Forward could prove to be a catalyst.

In other words, Dendreon's Board of Directors might pull their heads out of the sand and light a fire under Gold's okole. If a $29 million Co can do it, what's stopping Dendreon and its well-heeled (re: new slate of options) executives?

Gloom for longs? Yes. But the pressure is mounting. Good pressure.

Disclaimer: Pupule Paul is long DNDN and wishes he had been long NWBO.OB.

Not for the squeamish: Dendreon

There's a reason why I'm writing about a C grade stock. Many reasons.

Dendreon (DNDN $7.79)
Chart
Grade: C

The skinny: I don't like putting a stock rated below 'B' on this list, but that doesn't mean absolute rules are best. Dendreon was a D company in my book for several weeks despite my optimism about the potential of Provenge. Even with the shenanigans of anti-DNDN forces at the FDA and elsewhere, the risk-reward has improved for this company and its immunotherapy vaccine for late-stage prostate cancer. I'd rather wait until the PPS dives below $6.50 again, but this is not a bad entry point, either. Still, it could be two years (or more) before a real, sustained move enters the territory. Short interest is so compact and large (49%) that any good news will cause tremors.

X factor: For all the corruption and arrogance of its foes, much of Dendreon's shot at survival will depend on its ability to find a ROW partner, one that won't take a cut of US profits. Provenge could become worth $1 billion per year, or it could be literally shelved, depending on management's ability to emerge out of a hostile environment. The jury is out on whether CEO Mitchell Gold can hit that finish line.

Summary: Traders are riding the stock up and down, and without ROW and/or partnership news, or completion of Dendreon's 9902B (Phase 3) trial enrollment, this is not a fundamentally sound issue to buy. However, for those who believe in the science and potentially groundbreaking immunotherapy, this is a stock worth holding and accumulating.

Extra point: The Dendreon forum at Investor Village has been chastized by some in the media as cultish. These same media — not all of them — are showing more focus on retail investors than their actual job. So far, only Mike Huckman of CNBC has had the fortitude and integrity to ask tough questions about conflict-of-issue concerns (re: Dr. Howard Scher) regarding Provenge opponents. Most of the remaining media has been gutless, to be blunt.

Disclaimer: Pupule Paul is long DNDN.